In Ethnocentric Approach, the key positions in the organization are filled with the employees of the parent country. All the managerial decisions viz. It is based on the rationale that, the staff of the parent country is best over the others, and also, they can better represent the interest of the headquarters. Advantages of Ethnocentric Approach Better coordination between the host and the parent company. The culture of the parent company can be easily transferred to the subsidiary company, thereby infusing beliefs and practices into the foreign country.
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He states that businesses and their staff tend to operate in one of four ways: Ethnocentric These people or companies believe that the home country is superior. When they look to new markets they rely on what they know and seek similarities with their own country. Overseas subsidiaries or offices in international markets are seen as less able and less important than the head office.
In these companies, opportunities outside the home country are ignored. Such companies are also sometimes referred to as domestic companies. Polycentric In contrast, polycentric organizations or managers see each country as unique, and consider that businesses are best run locally. Polycentric management means that the head office places little control on the activities in each market, and there is little attempt to make use of any good ideas or best practices from other markets.
The term multinational company is often used to describe such a structure. Regiocentric A regiocentric organization sees similarities and differences in a world region, and designs strategies around this. Often there are major differences between countries in a region. For example, Norway and Spain are both in Europe, but are very different in climate, culture, transport, retail distribution, and so on. Geocentric Geocentric companies, as truly global players, view the world as a potential market, and seek to serve this effectively.
The case of European Silicon Structures illustrates the practice of geocentric organizations.
International Marketing - EPRG Framework
This framework addresses the way strategic decisions are made and how the relationship between headquarters and its subsidiaries is shaped. These stages are discussed below. Ethnocentric Orientation The practices and policies of headquarters and of the operating company in the home country become the default standard to which all subsidiaries need to comply. Such companies do not adapt their products to the needs and wants of other countries where they have operations. There are no changes in product specification, price and promotion measures between native market and overseas markets. The exercises, activities and policies of the functioning company in the native country becomes the default standard to which all subsidiaries need to abide by. The benefit of this mind set is that it overcomes the shortage of qualified managers in the anchoring nations by migrating them from home countries.
Geocentrism[ edit ] The third and last aspect of the EPG model is the geocentric portion, this notion focuses on a more world-orientated approach to multinational management. The main difference of geocentrism compared to ethno- and polycentrism is that it does not show a bias to either home or host country preferences but rather spotlights the significance of doing whatever it takes to better serve the organization. Instead, management selects the person best suited to foster the companies goals and solve problems worldwide. For example, the standards in which the home country operates are going to be much different from how the host country operates.
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